Looking to 2007, Hotel Managers Can Expect
Meeting Planners to Providethe Same Number of Meetings, But Receive More Revenue

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by Robert Mandelbaum, January 2007

Same Meetings - More Money

For several quarters now, PKF Hospitality Research (PKF-HR) has observed
that the U.S. lodging industry is approaching a peak in the long-term business
cycle. At the peak, hotel occupancy levels either stabilize, or decline
slightly. Concurrently, management strives to aggressively increase
room rates. The net result is fewer occupied rooms, but more revenue.

Looking to 2007, hotel managers can expect a similar outcome in the
conventions market. Based on a recent survey conducted by PKF-HR
and Convention South magazine, 64.6 percent of meeting planners expect
the number of meetings they organize in 2007 will be comparable to the
2006 level. An even greater number (86.1 percent) believe the number
of exhibitions year over year will remain the same.

However, the attendance at these events should be greater, as well as
the total dollars spent by the sponsoring organization. Because of
the combination of more attendees and rising prices, a majority of planners
(51.2 percent) plan on spending more to stage their events in 2007 compared
to 2006.
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Change in Number of EventsPercent of Meeting Planners

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PKF-HR, in conjunction with Convention South magazine, surveyed a total
of 131 meeting planners. Although the survey focused on meetings held within
the southern region, the sample of respondents consisted of planners located
throughout the nation. Association meeting planners comprised 46.6
percent of the survey sample, followed by corporate planners (19.8 percent).
The remaining respondents were evenly divided among government/non-profit,
independent, and other meeting organizers.

Cutbacks?

While increased expenditures are virtually inevitable, 63.4 percent
of the planners did state they were feeling some degree of pressure to
control their event budgets. For those planners being asked to cut
costs, the areas of focus for reduction are off-site events (36.6 percent),
food and beverage (32.1 percent), and audio-visual (24.4 percent).
Conceding that the pendulum of negotiating leverage clearly favors hotel
sales managers, only 21.4 percent of the planners looked to trim guestroom
rates, while 17.6 percent have attempted to reduce the cost of meeting
room rental.
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Where Meeting Planners Are Cutting CostsPercent of Meeting Planners

None

36.6%

Off-site Events

36.6%

Food and Beverage

32.1%

Audio / Visual

24.4%

Guest Rooms

21.4%

Meeting Rooms

17.6%

Programming

13.7%

Transportation

11.5%

Other

4.6%

..

Another indication of the challenges meeting planners face in negotiating
lower room rates is the fact that an increasing number of organizers are
now looking to hold their events in second or third-tier cities.
In 2006, 40.3 percent of the planners surveyed indicated that they looked
beyond the nationís first tier of meeting destinations. This number
has grown from 31.5 percent in 2004 and 35.5 percent in 2005.

Selection Criteria

The inability to negotiate hotel room rates frustrates meeting planners.
When asked to rate the importance of nine criteria when selecting a meeting
site, the price of hotel rooms tied with the number of available hotel
rooms as the second most important site selection criteria. The size
of available meeting space was ranked as the most important factor determining
the location of an event.
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Attrition clauses were a concern for the majority of meeting planners.
More than half (57.3 percent) of the planners surveyed stated that the
severity of hotel attrition clauses have affected their site selection
process. On the other hand, the recent increases in gas prices and
airfares were not as significant. Only 16.9 percent of the respondents
stated that gas prices influenced their site selection, while increased
airfares was a determining factor for just 23.8 percent of the planners.

Productive and Happy Attendees

Typically, the plannerís role when organizing a meeting is to achieve
the stated goals of the event within a given budget. This may, or
may not, be consistent with the expectations of the attendees.

The planners in our survey were asked to rate the importance of 13 on-site
hotel amenities to meeting attendees. The offering of restaurants
and lounges within the confines of the property was rated by 86.3 percent
of the planners as an important amenity for attendees. Delegates
may want a night on the town, but theyíd prefer to do most of their eating
and drinking within the hotel.
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On-site Amenities Desired by AttendeesPercent of Meeting Planners

Restaurant / Lounges

86.3%

Business Center

73.3%

Pool

71.8%

Fitness Facility

69.5%

Golf

45.8%

Spa

44.3%

Upgraded Bedding

38.2%

Beach

29.0%

Hiking, Biking, Jogging

13.0%

In-room Kitchen

13.0%

Tennis

10.7%

In-room Fitness

5.3%

Other

6.9%

.While attendees want to enjoy their time away from home or their business,
they also want to remain productive. Second on the list of most important
hotel amenities was access to a business center (73.3 percent). Meeting
planners recognize the desire of attendees to be both productive and happy.
Therefore, the availability of guest room and meeting room technology (i.e.
wi-fi, high-speed internet access, video conferencing, high-tech entertainment)
was consistently rated as an important hotel feature.

Remaining healthy is another important feature for meeting attendees.
The only other on- site amenities rated by more than half of the planners
as being important to their attendees were swimming pools and fitness facilities.
While downtown full-service and convention hotels were the favored lodging
facilities for 32.1 percent of the respondents, resort hotels were rated
as the preferred type of hotel by 24.0 percent of the planners. This
is yet another indication of the desire to blend recreation and enjoyment
with business and learning.

Yield Meeting Management

While short and near-term market conditions certainly favor hotel sales
managers, donít expect meeting planners to be totally submissive.
Expect some groups to move to secondary destinations, while others will
cut event activities.

Operating at the peak of the business cycle allows hotel operators to
be more selective in the groups they decide to accommodate. A few
less events can be offset by increases in attendance and prices.
However, being a cyclical industry, lodging operators must be aware that
meeting planners will remember the current tough negotiating stance when
the next industry recession occurs.

Robert Mandelbaum is the Director of Research Information Services
for PKF Hospitality Research. Special thanks to Kristen McIntosh,
vice president and editor of Convention South, for sponsoring the survey.
This article was published in the December 2006 edition of Lodging magazine.